Faculty of Business and Economics
Permanent URI for this collectionhttps://repository.tmu.ac.ke/handle/123456789/170
Browse
15 results
Search Results
Item Structural Characteristics and Conduct of Sweet Potato Market in Rachuonyo Region, Kenya: Perception of Sweet Potato Farmers and Traders(East African Journal of Business and Economics, 2023-07-31) Dr. Alphonce Juma Odondo, PhD1*Myriad studies have been conducted on commodity markets in different parts of the world. However, such studies have yielded inconsistent results on various facets of market structure and market conduct, implying that each market may have its distinctive characteristics which impact on its performance. In SubSaharan Africa, the growth of sweet potato industry is hindered by lack of information on sweet potato market structural characteristics. Kenya’s sweet potato industry is facing a similar challenge. This scenario calls for a baseline survey on the sweet potato market structural characteristics and conduct as a basis for subsequent robust studies on the possible nexus between the market structure, conduct and performance of the industry. The study adopted a descriptive survey design based on interpretivism research paradigm. A sample size of 384 farmers, 166 retailers and 55 wholesalers were taken. Pretested questionnaires were used to gather perception of the respondents on various parameters based on a fivepoint Likert scale. The views were then summarized in terms of means scores. It was established that the sweet potato market was imperfect since there were notable elements of potato differentiation and barriers to entry into the market. Such barriers included competition from other traders and uncertainties in the demand for sweet potato. The situation was exacerbated by lack of suitable storage facilities given the perishable nature of the commodity. High market concentration was noted at the wholesale level, a likely indicator of price collusion and exploitation by the few large sellers that dominated the market. In this regard, there is need to enhance value addition activities that can enable the market players especially the farmers to be more competitive within the supply chain. Efforts should also be made to eliminate the identified market barriers.Item Effect of Monetary Facets on Dynamic Capital Structure of Selected Commercial Banks Listedat the Nairobi Securities Exchange, Kenya(THE INTERNATIONAL JOURNAL OF BUSINESS & MANAGEMENT, 2021-02) Rose Adem; Dr. Alphonce Juma Odondo; Dr. Evans Ovamba KigandaDynamic capital structure is the way firms make adjustments towards the target capital structure which is proxied by debt equity ratio. There has been variation of debt equity ratio of firms at the Nairobi Security Exchange (NSE) in an effort to achieving targeted leverage that would yield targeted revenues and profits for firms.Despite this, most firms still operate at sub optimal level and experience losses. Studies in this respect have attributed the sub optimal operations to monetary facets such as inflation rate, exchange rate and interest rate. However, the studies have yielded mixed results leaving the effect of monetary facets on the dynamic capital structure unresolved. It is on this basis the study sought to establish effect of the monetary facetson dynamic capital structure of selected commercial banks listed at the NSE. The study was anchored on market timing theory and guided by correlational research design. The target population was eight tier one banks at the NSE. Secondary data spanning tenyears from 2010 to 2019 were obtained from commercial banks audited financial statements while data on monetary facets was obtained from Central Bank of Kenya database and audited financial statements of the banks. Panel data methodology was adopted to estimate Random and Fixed Effect Models and the Hausman test used to select the appropriate model. Whereas exchange rate had insignificant positive effect, interest rate had significant positive effect on the dynamic capital structure. Inflation however, had significant negative effect on the same. Therefore, to enhance performance of banks, hedging interest rate and inflation rate risks is necessary.Item Causal Effect of Financial Market Frictions and Flight to Quality on Cost of Credit in Kenya(Journal of Economics and Sustainable Development, 2021-11-06) Barnabas Ochieng’ Onyango; Dr. Alphonce Juma Odondo; Prof. John Ernest OdadaFinancial market conditions have been declining over the past ten years globally as most developing countries continue to adopt more liberal financial policies, such conditions may amplify adverse shocks to the economy. The Kenyan Banking sector was highly profitable before the implementation of financial market frictions, with industry return on equity’s average of 20%. The ratio of credit supply to gross domestic product was 35%; and the economy grew by 5.6 %. Nonetheless, after its adoption, listed Banks recorded negative Earnings per Share growth of 8.2%, compared to an average positive growth of 14.1%, The Net Interest Margin declined to 8.4% from 9.4%. Studies relating to financial market frictions, flight to quality and Cost of Credit have produced mixed results. It was on this basis that this study sought to establish the effect of financial market frictions and flight to quality on cost of credit in Kenya. The study adopted correlational research design. Secondary data from the Kenyan Market for the period January 2009 to December 2019 was analyzed. Augmented Dickey Fuller and Philips-perron unit root test was used to test the stationarity of the data. VECM was estimated to establish the speed of adjustment towards the long run equilibrium; Wald statistics was also estimated to establish short run causalities amongst the variables. Based on cointegrating equations, the error correction term indicated a negative sign and was significant at 5% level (C (1) = -0.153042, .0429 < 0.05), an indication that a long run relationship exists amongst the variables. Wald statistics revealed that the estimated coefficients in the VECM were insignificantly different from zero (.8417; .5603; .9188>p=0.05),however, Central Bank rate was found to be different from zero and significant at 5% level (.0163>p=0.05), an indication that there was a short run casualty running from the Central Bank rate to cost of credit. The study therefore recommends that for Micro finance institutions to maximize their profits they should adopt new technologies like Mobile Banking for their credit facilities, this does not require administrative and operation costs, in a bid to cope with the market shocks and frictions.Item Nexus between Inflation and Real Estate Growth in Kenya:(American Research Institute for Policy Development, 2021-03) Dr. Alphonce Juma OdondoReal estate has been one of the most profitable industry world over. In Kenya, the industry has grown exponentially and contributes significantly to her GDP. The growth has been ascribed to demographic trends like rapid urbanization at 4.4% p.a against the world’s 2.5% p.a. The trends have led to rising demand for residential services with accumulated deficit of over 2 million units. This scenario attracted the attention of Kenya Government to the extent that it identified affordable housing as one of the key strategic focus areas in its Medium Term Plan III for 2018-2022. Despite the attention, paucity of information on the nexus between real estate growth and its determinants like inflation continues to hamper policy formulation in this sub sector. In addition, studies on the nexus have generated mixed results and debate in the realm of economics. The study utilized world bank time series data and estimated a vector error correction model which revealed absence of long run nexus between real estate growth and various dimensions of inflation (core, energy and food). However, short run causality running from energy inflation to real estate growth exists. The energy inflation had a significant negative effect on real estate growth. Core inflation had a positive significant effect while food inflation had an insignificant positive effect. Thus, ceteris paribus, in order to enhance growth of the real estate industry, energy inflation should be reduced and ensure continuous stabilization of core and food inflation as an incentive to potential investors and the households seeking to acquire housing services in the economyItem Dynamics of Core Inflation, Energy Inflation, Food Inflation and Manufacturing Sector Output Growth in Kenya: Econometric Analysis of Causality and Effects(www.iiste.org, 2021-01-31) Dr. Alphonce Juma OdondoWorld over, the manufacturing sector plays an important role in spurring economic development by boosting employment opportunities for semi-skilled labour and building a nation’s competitiveness through exports. Globally, only a few nations have managed to realize their development status without manufacturing sector playing a leading role. Kenya has not managed to develop a robust manufacturing sector and its growth has been majorly ascribed to the agricultural and service sectors. It has therefore, experienced de industrialization as evidenced by the decline in GDP contribution by the manufacturing sector from a paltry 10% in 2018 to 9.7% in 2019. The de industrialization has been characterized by fluctuating inflation rates, a scenario that has elicited debate as to whether there exists any nexus between manufacturing sector output growth and inflation rate. A few empirical studies have been conducted on the same, however, the exact relationship is not well defined. Furthermore, inflation has been largely treated as an aggregate, a scenario that hampers policy formulation. A disaggregated approach to the analysis thus motivated this study. Time series data from the world bank was used and VECM estimated to assess long run dynamics after stationarity test by ADF and Cointegration test by Johannes’s approach. Short run causalities were assessed via Wald test. The study revealed long run relationship between manufacturing output growth and the variables (core inflation, energy inflation and food inflation). Short run causality running from each of the inflation types to manufacturing output growth also exists. Food inflation negatively and significantly influences manufacturing output growth while core inflation has significant positive effect on the same. To enhance manufacturing output growth in Kenya, food inflation should be reduced and stabilized. In the same vain, low and stable level of core inflation should be ensured over time.Item Effect of Foreign Multilateral Aid and Foreign Bilateral Aid on Capital Formation in Kenya(American Research Institute for Policy Development, 2019-09) Mukhongo Wafula; Alphonce Odondo; Nelson ObangeLow capital formation in Kenya, averaging rate 20.13% of GDP over the period 2006-2017 has kept unemployment rate above 39% with more than 65 per cent of people living on less than $ 2 a day. Yet previous studies do not have a clear answer to the question of whether increasing bilateral aid/multilateral aidenhances capital formation or not. This study’s purpose was to investigate the effect of multilateral aid and bilateral aid on capital formation in Kenya. The study was anchored by Solow (1956) model. Autoregressive distributed lag estimates for data over 1974-2017 suggested that multilateral aid has positive insignificant effect on capital formation while bilateral aid has negative significant effect after one year. Error correction mechanism model estimates suggest that bilateral aid has positive significant effect on capital formation in the short-run during the programme year but becomes negative thereafter. The results were robust for impulse response analyses. The study concluded that bilateral aid retards capital formation in the long run but enhances it in the short-run during the first year.Soliciting for more bilateral aid was recommended in order accelerate capital formation in Kenya in the short-run.Item Effect of Domestic Saving on Capital Formation in Kenya(www.iiste.org, 2019-08-31) Mukhongo Wafula; Nelson Obange; Alphonce OdondoKenya’s average rate of gross capital formation of 20.13% of GDP over the period 2006-2017 falls short of at least 25% necessary for developing countries to experience sustainable growth. The attendant effects of low capital formation have entrenched unemployment rate above 39% line and consigned more than 65 per cent of the country’s population to living on less than $ 2 a day. The statistics suggest the need for urgent policy intervention aimed at accelerating capital formation in Kenya. But whether the government should respond by mobilizing more domestic saving or not is the question which this study sought to answer. This is because majority of the previous studies that investigated the effects of domestic saving on development indicators limited themselves to growthsaving nexus. Those that investigated the effect of domestic saving on capital formation either restricted themselves to a bivariate framework or controlled for a few sources of capital formation. This implies that the effect of domestic saving on capital formation is not clear. Besides, the response of capital formation to shocks in domestic saving is not clear. The purpose of this study was to investigate the effect of domestic saving and the response of capital formation to shocks in domestic saving. The study was anchored by Solow’s capital accumulation model within a correlational studies research design. Data over 1974-2017 period was sourced from the World Bank. ARDL bounds test found the existence of cointegrating relationship among gross capital formation, gross domestic saving and the controlled variables when gross capital formation was specified as the target variable. The short-run dynamic model estimates indicated that ECM term corrects 39.56% of deviations from long run equilibrium in one year. ARDL estimation indicated that in the long run, gross domestic saving has positive significant effect on gross capital formation. The results were robust for IRFs analysis which found the response of gross capital formation to innovations in gross domestic saving to be positive and significant. The study concluded that in the long-run, Kenya’s capital formation will be driven by domestic saving. Therefore, to achieve high capital formation in the long-run, the study recommended policies that enhance positive effects of domestic saving for consideration by the government of Kenya.Item Logit Analysis of the Relationship between Interest Rate Ceiling and Micro Lending Market in Kenya(Canadian Center of Science and Education, 2018-07-10) Onyango Barnabas Ochieng; Alphonce Juma OdondoInterest rate ceilings have been declining over the past decades as most developing countries continue liberalizing their financial policies. Prior to 2015, Kenya‟s banking sector was vibrant and highly profitable. The sector loan book grew at an impressive compound annual rate of 16% in 2011 to 35% in 2015. However, after interest rate cap in 2016, there has been a general slowdown in micro lending and rise in non-performing loans. Some studies argue that the ceiling protects consumers from exploitation and guarantees access to credit while others observe the contrary. This study sought to establish the relationship between interest rate ceiling and micro lending in Kenya. It was anchored on financial accelerator effect theory and the theory of financial repression. The study relied on secondary data from Banks and Micro Entrepreneurs. Logit models were estimated to establish the relevant relationships. It was established that interest rate ceiling had significant negative association with credit supply and default rate. However, it had a significant positive association with cost of Credit. Both Nagelkerke‟s R2 and Cox and Snell‟s showed that the estimated model fitted well. The Wald criterion demonstrated that credit supply, costs of credit and default rate were significantly different from zero. Thus, the independent variables were significantly affected by interest rate ceiling. It is recommended that banks pursuing policy of increasing credit supply and reducing cost of credit should advocate for the repeal of interest rate ceiling while those interested in reducing default rate should advocate for its retention.Item RELATIONSHIP BETWEEN FINANCIAL LITERACY AND BORROWING BEHAVIOUR OF SMALL-SCALE BUSINESS OWNERS IN HOMA BAY TOWN, KENYA(EPRA JOURNALS, 2017-03-03) Dickence Aketcha; Dr. Alphonce OdondoSmall-scale businesses play an important role in the global economy with over 60% of the population depending on them for employment. About 30% of the population in Kenya depends on Small-scale businesses for their livelihoods. However, up to 70% of the businesses are collapsing under the burden of unserviced loans. In Homa Bay town, 60% of the non-performing loans portfolio among commercial banks is from small-scale businesses, suggesting poor borrowing behaviour. While prior studies indicate that financial literacy generally influences borrowing behaviour, there is no clear link between financial literacy and borrowing behavior of small-scale business owners, particularly in Homa-bay town. On this basis, the study sought to establish the relationship between financial literacy and borrowing behavior among the small business owners. It was guided by correlational research design and anchored on the theory of Reasoned Action and the theory of Planned Behaviour. Out of 1220 business, a sample of 301 small scale business owners was taken. Stratified random sampling technique was used to draw individual respondents. Primary data were collected using questionnaires while secondary data were from the business records. Reliability coefficient for the questionnaires was 0.815 and content validity index was 0.723. Peason correlation and multiple regression were used to establish the relationship. The study revealed that 65% and 49.8% changes in the borrowing behaviour were associated with the business owners’ knowledge of key money concepts and knowledge on the financial institutions respectively. The estimated model could explain up to 59.6% variations in the borrowing behaviour of the business owners. The study concludes that borrowing behavior of the small-scale business owner is significantly related to the owner’s financial literacy. It is recommended that the small-scale business owners be educated more on financial matters, particularly the key money concepts and the existing financial institutions. Findings from the study may benefit both the borrowers and lenders in financial planning. Researchers may also use the findings as a source of literature for further research in the field of study.Item RELATIONSHIP BETWEEN FINANCIAL LITERACY AND BORROWING BEHAVIOUROF SMALL-SCALE BUSINESS OWNERS INHOMA BAY TOWN, KENYA(EPRA International Journal of Economic and Business Review, 2017-03-03) Dickence Aketcha; Dr. Alphonce OdondoS mall-scale businesses play an important role in the global economy with over 60% of the population depending on them for employment. About 30% of the population in Kenya depends on Small-scale businesses for their livelihoods. However, up to 70% of the businesses are collapsing under the burden of unserviced loans. In Homa Bay town, 60% of the non-performing loans portfolio among commercial banks is from small-scale businesses, suggesting poor borrowing behaviour. While prior studies indicate that financial literacy generally influences borrowing behaviour, there is no clear link between financial literacy and borrowing behavior of small-scale business owners, particularly in Homa-bay town. On this basis, the study sought to establish the relationship between financial literacy and borrowing behavior among the small business owners. It was guided by correlational research design and anchored on the theory of Reasoned Action and the theory of Planned Behaviour. Out of 1220 business, a sample of 301 small scale business owners was taken. Stratified random sampling technique was used to draw individual respondents. Primary data were collected using questionnaires while secondary data were from the business records. Reliability coefficient for the questionnaires was 0.815 and content validity index was 0.723. Peason correlation and multiple regression were used to establish the relationship. The study revealed that 65% and 49.8% changes in the borrowing behaviour were associated with the business owners’ knowledge of key money concepts and knowledge on the financial institutions respectively. The estimated model could explain up to 59.6% variations in the borrowing behaviour of the business owners. The study concludes that borrowing behavior of the small-scale business owner is significantly related to the owner’s financial literacy. It is recommended that the small-scale business owners be educated more on financial matters, particularly the key money concepts and the existing financial institutions. Findings from the study may benefit both the borrowers and lenders in financial planning. Researchers may also use the findings as a source of literature for further research in the field of study.